Auto insurance rates and vehicle recalls – when you think about it, recalls are almost inevitable, if only because of the sheer number of units that come off of an assembly line and the volume of work that goes into vehicle design. There are certain to be flaws that occur, but if this is the case with your vehicle, you should not have to worry about your auto insurance rates going up as a result – in most cases. However, there will be some circumstances in which a recall could affect what you pay for auto coverage.
Just the Facts
It should be pointed out that while Toyota has taken a lot of heat over the past year on account of sticking throttles and defective brakes, most vehicle recalls have more to do with environmental issues (excessive emissions, improper pollution controls) than they do safety ones.
That said, in general, car insurance premiums can be increased every time the policy is up for renewal – and an insurer can do this for any number of reasons. If you believe your premiums have been raised unfairly or in error, you do have some recourse, however. Most insurance companies have procedures in place through which a customer can file an appeal, objection or complaint. When all else fails, a customer can simply sign up with a competing insurer. (Watch out, however: an auto insurance policy is a legally binding contract between you and the company, so you need to give advance notice that you are canceling and make certain your new policy is in effect. Don’t just stop paying your premium, or you’ll be penalized.)
When it comes to vehicle recalls however, an insurer cannot simply raise your rates on that basis. It’s true that car insurance cost is determined in part by the make and model of the vehicle. However, all other things being equal, a built-in mechanical defect that results from a design flaw is the fault of the manufacturer, not you as the vehicle owner.
In addition, most states have insurance regulations that prohibit insurance companies from raising rates on a customer whose vehicle has been subject to recall.
When Your Rates Might Go Up
There is one reason that an insurer can legally raise your auto insurance price in connection with a recall – and that’s if it is determined that you failed to respond to a recall notice or did not have qualified technicians correct the defect. Should you be involved in a collision and the insurance adjuster finds that such a mechanical defect was to blame, your insurance rates could go up on the basis that you were negligent.
Furthermore, if you do not respond to a recall notice, an insurance company can assess penalties – or even drop you altogether.
There is also the possibility that a recall may affect a particular make and model in terms of ratings – in other words, the actuarial indications that determine how much it should cost to insure that specific make and model.
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